The S&P500 is made up of the 500 largest companies in the US. ETF’s are the most cost-efficient to get exposure to the S&P500.

Investing in ETFs has advantages to that of only getting exposure to the S&P500:

Diversification/ Risk minimisation
The S&P 500 only contains stocks in the US market. Solely getting exposure to the index would mean a lot of volatility and will be heavily affected by Trump’s tweets. Investing with Sarwa will allow you to invest in VTI US Stocks ETF which has 3000 companies allowing diversification and the IEMG ETF which allows you to benefit from Emerging market stocks. Sarwa allows you to get exposure to 6 different ETFs, therefore, your money is invested in a broader range of asset classes including bonds and real estate so your investments are hedged during economic downturns.

Cost
Buying share(s) of each company in the S&P500 means at least 500 trades taking place which is very expensive and time-consuming. You can get exposure to all 500 companies, while diversifying your portfolio well, according to their corresponding weights by simply investing in ETFs.
Was this article helpful?
Cancel
Thank you!